Finance Minister P Chidambaram urges regulators to introduce single KYC across all intermediaries and promises to tweak RGESS in upcoming budget to attract retail investors.
Acknowledging the concerns on the complexities of complying with RGESS, Finance Minister P Chidambaram promised to make RGESS more easily accessible to investors in his forthcoming budget. He also said that the government will relook at the tax incentive for investing in RGESS to make them more attractive. Currently investors are eligible to save tax up to 50% on investments of up to Rs. 50,000 in RGESS.
“It is being said that such sophisticated analysis is beyond the capacity and means of the small investors and complying with that would be difficult. Some have pointed out that the provision of 50 per cent of the contribution up to Rs 50,000 be permissible as reduction is not an adequate incentive,” said P Chidambaram in Mumbai today.
He also urged the regulators to standardise KYC norms across all intermediaries and regulators to attract retail investors. He said that a bank account should suffice for anyone to open a demat account.
Fund houses like IDBI, DSP BlackRock, LIC, SBI and UTI rolled out their RGESS today. All the schemes would close for subscription on March 8 to 9, 2013. SEBI has recently extended the NFO timeline of RGESS to 30 days. Many more AMCs are expected to get SEBI’s approval to launch their RGESS soon.
SEBI chief U K Sinha said that SEBI is in talks with the finance ministry for sustaining RGESS through mutual funds. Mutual funds were originally not a part of RGESS when it was announced in Union Budget 2012.
Investors who have opened a demat account but not yet transacted are also eligible for RGESS. AMC officials say that depository participants are hoping to tap a large pool of inactive demat account holders for investing in RGESS.
